* Calls ratings agencies 'thermometers that give a fever'
* Dexia waiting on details of guarantee scheme
(Adds further comments, background)
By Ben Deighton
BRUSSELS, Nov 25 The Chief Executive of
troubled Franco-Belgian bank Dexia on Friday accused
speculators of using underhand methods to try to force a default
in sovereign bonds, a practice he compared to 17th-century
Pierre Mariani has been forced to seek government help for
Dexia, after it was hit by the dwindling value of its holdings
of European government bonds. At a seminar in Brussels, he spoke
out against speculators who, he said, buy insurance against bond
defaults, and then try to cause a default.
"We are pretty much in that situation, where there are bad
people who buy these insurances, and behind they go and finance
pirates who will allow them to make a lot of money on it,"
"We are in a mechanism which is what the king of England
banned in the 17th century," he said. "That's to say the naked
insuring of shipping cargoes ... because there were bad people
who subscribed to the insurance even though they had no stake in
the ships in question and who paid pirates to sink them."
Analysts said the criticism of default insurance wasn't
totally unreasonable, but that it showed that Mariani was
feeling the strain of the attention that has been focused on him
"I can imagine this guy's under a lot of stress the last few
days," said one analyst at a major European bank.
Dexia remains on financial life support while it waits for
Belgium, France and Luxembourg to finalise the details of a
guarantee package promised in October.
That package came after Dexia, facing the threat of
collapse, agreed to the nationalisation of its Belgian banking
division. Under the package France, Belgium and Luxembourg
committed to provide the bank with 90 billion euros ($120
billion) in state guarantees.
However, details of this deal have not yet been finalised.
Until they are, the bank is relying on expensive emergency
central bank funding.
On Friday, Mariani also took aim at ratings agencies,
calling them "thermometers which give a fever".
Dexia's problems came from a business model established in
the mid-1990s, which relied on short-term funds to finance
long-term loans to public authorities.
In July, Moody's cut its long-term rating for Dexia's three
main entities from A1 to A3, citing the bank's short-term
funding reliance as well as potential losses on assets Dexia
planned to sell.
When agencies put Dexia's short-term rating under revue,
significant amounts of financing disappeared, Mariani said.
Mariani and Dexia's chairman, Jean-Luc Dehaene, have
defended their record. They were appointed in October 2008, a
week after Dexia had received a 6 billion-euro bailout --
equivalent to some $8.3 billion at today's exchange rate -- from
Earlier this month, Dehaene likened himself and Mariani to
firefighters -- responsible for trying to put out the flames,
but not for the fire itself. "We cannot be held responsible for
the ruins," he told a committee of Belgian lawmakers.
Belgian Prime Minister Yves Leterme has also said that
Dexia's troubles were caused by a business model decided in the
Since Wednesday Dexia's share price has risen by almost 60
percent to 0.4 euros on hopes that a temporary guarantee might
be signed shortly. However this remains far below its high for
the year of 3.4 euros.
($1 = 0.7506 euros)
(Reporting By Ben Deighton; Editing by Sebastian Moffett and